GolfStinks

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Are Golf Course Closures a Good Thing?

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According to a recent report from the NGF (National Golf Foundation), new golf course openings are at “historic lows,” while course closures continue to pile up. While many will take this as a negative sign within the industry, perhaps we should look at it from a different angle?

Here’s a breakdown of golf course openings and closures last year:

golf course openings and closures
Source: NGF

So what does the above graphic tell us? Well, that in 2012, only 13.5 18-hole facilities opened compared to 154.5 that closed. But beyond that, it tells us that the closures mostly stemmed from Daily Fee and Muni-type courses (90%). And of those, nearly 70 percent had greens fees under $40.

So what?

Well, this means lower-end courses are the ones folding. While that may not bode too well for your particular community, it might be a good sign for golf as a whole. Courses offering 18-holes of golf for under $40, at least in my area, are typically not the most well-maintained tracts of land around; there are usually waits on multiple tee boxes; and inevitably end up becoming training grounds for newbie golfers (hence the backups on the course – not from overuse, but instead from slow play).

Let me be clear here: Not every 18-hole facility with greens fees under $40 fits my description above – but, it is extremely difficult to operate a respectable 18-hole course in today’s economy…especially for under $40 per round. Thus the ones that are run the risk of being understaffed and in disrepair (prime candidates to buckle under tough economic times).

Now, there’s nothing wrong with learning the game at an inexpensive course, but perhaps a full-sized 18-hole facility isn’t the best place? There are many decent and inexpensive “9-hole” or “par 3” or “executive” courses out there (which are excluded from the graphic above) that offer a wonderful learning opportunity for newbies. This is where you need to go if you are transitioning from the driving range to the course.

No one asked for this economy, but the reality is we have it. And perhaps the 150+ courses that closed last year will ultimately benefit the golf industry as a whole. Because what we are left with is survival of the fittest. The better 18-hole facilities will remain – and that bodes well for when those golf newbies are ready to make the transition from a 9-hole or executive course to a bigger facility. They will not be disappointed with what they find – rather they will get to experience the best golf has to offer.

And if that happens, then you will have golfers for life.

Is the Golf Industry Improving Economically?

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The recession we’ve experienced over the last few years has been tough – The job market is terrible; real estate prices are wretched; and progress has been, well…slow. But apparently, more people have been hitting the links this year!

According to a recent report from the National Golf Foundation (NGF):

“The big story of 2012 in the golf business is the year over year increase in rounds played. In fact, if fourth quarter rounds are flat with the same period in 2011, we would end the year with the largest single-year jump since the turn of the century; a national gain of more than 30 million rounds.“

This surprised me, considering the tough times we’ve been living in. Personally, my number of rounds played has also gone up this season, but that was to be expected after a couple of golf-limiting events in 2011: A new addition to the family and my battle with a foot ailment.

Though I was playing more, I suspected many were not. So I was extremely pleased to see that things seem to be improving within the golf industry – at least as far as the number of rounds played is concerned.

Golf has certainly not been immune to the recent economic woes – NGF notes that golf rounds played has declined around 11% over the past decade, bottoming out in 2009 (the height of the recession). But the good news is the numbers from 2012 appear to show nearly half of what was lost might be recovered.

NGF attributes some of this to the weather, in which 2012 saw an 8% increase in “playable days” compared to 2011. But it also credited the general increase in spending in the U.S., which seems to have roughly paralleled the increase in golf rounds.

So more people are playing golf – great! But what about the rest of the industry? Not surprisingly, course operators have seen an increase in revenue this year. But new course development is still at “historic lows and that should continue for the foreseeable future.” Meanwhile, golf equipment sales are progressing slowly – but progressing nonetheless (still below pre-recession levels).

NGF points out that as we continue to emerge from the recession, so too should we see a general improvement in all things golf-related. But one has to wonder, with Tiger a cub of his former self and no real face to the PGA tour, will the golf industry ever reach its pre-recession hay day – even in a thriving economy?

Related Posts: The Economics of Golf

Will The Elections Help Golf?

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Without getting too political and inciting an e-riot, I wonder if the outcome of this year’s presidential elections will help put more people on the course? It’s no secret that we’re still recovering economically and we can easily get into a heated debate as to who’s fault it is but my concern is the future.

The NGF reported in the last five years that golf (in the U.S.) has lost 4 million golfers. They also say that female golfers (U.S.) are down 23% over the past five years. When golfers were asked why they don’t play as much they’re top answers were 1) My spouse/significant other doesn’t play and 2) Congestion on the golf course.

Wait a minute, I play to get some “me” time and get away from the everyday stuff, no offense honey. And  Congestion? If we are losing golfers every year wouldn’t you think that means less people on the course? Oh wait…golf course closures. Damn economy! Which brings me back to the title. When will golf see a ramp up in activity?

I can only hope that just like a lot of businesses, we are waiting to see who will be president and then return back to normal no matter who wins. I wonder if the fear of the unknown is causing us to stall and wait. Regardless if it’s Obama or Romney, the power is still in numbers. The elected officials can tell us what they think will work but it comes down to us to make it happen. Just my $0.02…

Hit’em long…yell FORE! 

A New Way To Spark The Golf Economy

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I don’t feel like getting into the mathematics or science of it, but lets just say the golf industry is continuing to struggle.

According to the last Rounds Played Report from the NGF (2009-2010, because 2011 is obviously not over yet and therefore cannot yet be analyzed), the number of rounds played in the U.S., including both public and private courses, dropped by 2.3% – the largest drop since 01-02 (3%). This marks the fourth consecutive year, as well as the seventh of the past eight, that rounds played has dropped.

Again, I’m not going to attempt to explain the math, but according to the numbers I’ve looked up, these drops in rounds have worked out to an average loss per course throughout the country of $48,000 per year. All total, you’re looking at a loss of roughly $117 million dollars per year being spent on rounds of golf. With numbers like that, it’s no wonder private courses are going public and publics are going under.

So what can be done? Well what if there were more opportunities to play? What if you just had a little more time to play? Take for instance the Thanksgiving holiday. Many people had a four-day weekend (not me, but many). Now, a four-day weekend is pretty rare. But even the occasional three-day weekend provides ample opportunity to gain an extra day of golf during the year. Problem with Thanksgiving is, it’s usually too cold here in the northeast to get out and play at all.

It seems what’s needed is a new three-day weekend. One to take place during golf season. And being that the state of the game is what it is, the USGA may want to lobby for this as well. Personally, my vote would be for August. I know June doesn’t have any three day weeknds either, but with Memorial Day occuring late in May and Independence Day falling at the beginning of July, I can make it through June. But with the gap between the 4th of July and Labor Day, that’s a much longer period of time to go without a day off.

So, now that we’ve established August, what exactly are we going to celebrate? Well, there are several birthdays which occur in August that are worthy of some notoriety. Francis Scott Key for instance was born on August 1st. Three former presidents (Benjamin Harrison, Hoover and LBJ) were all born in August as well. Mother Teresa for cryin’ out loud! Surely Mother Teresa deserves a holiday in her name!

But I think there are two people who’s August birthday’s could be celebrated together. Two important Americans whom we all learned about while we were children in elementary school. Two people who’s names have become synonomous with searching for lost golf balls in the woods. Who are they you ask? None other than William Clark and Meriwether Lewis AKA Lewis & Clark.

Think about it. How many times have you seen your golfing buddies, or some people from another group ahead of you wandering the woods searching for their ball – “We’d probably have teed off by now if it wasn’t for Lewis & Clark searching for their balls in the woods.” Or “Check out Lewis & Clark mapping a trail to the green.”

Surely two great American pioneers together are deserving of one day to celebrate their accomplishments. After all, if not for Lewis & Clark, we may still not have discovered Omaha! And consequently, we may have never tasted those fantastic steaks! Culinarily speaking, where would we be then?!

Being that their birthdays fall on August 1st (Clark) and August 18th (Lewis), it seems to me like a good day to celebrate would be somewhere in the area of August 9th or 10th, with the actual observed holiday falling on the Monday or Friday closest. And just like that, we’ve given golfers an extra day of golf every summer.

So look what we’ve done here. We’ve gained an extra day off for our hard-working Americans, some recognition for two great pioneers, and an instant spark to the golf economy. What more could you ask for?

OK, we’ll work on June as soon as we get the one in August.

Swing ’til you’re happy!

Golf Course Bankrupt? Blame Tiger Woods

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In this recent recession, some big investment banks were rescued from a mess that company spokespeople claimed they didn’t need to be rescued from. Nevertheless, they were labeled as “too big to fail” and were pulled to safety on the public’s dime.

Meanwhile, golf courses have been buckling under current economic conditions those aforementioned banks had a hand in creating. The last five years have not been kind to courses in the United States. But recent data from the National Golf Foundation (NGF) suggests golf facilities in general are holding their ground fairly well.

A preview of The NGF’s Golf Facilities in the U.S. report, 2011 edition (which will be released in February) reveals course closures from 2006-2010 represent just 1.5 percent of courses overall. In 2010, the figure was less than half of one percent. These statistics prompted the NGF to state the following: “Considering the severity of the recession, one could argue that golf has held its ground reasonably well.”

However, despite NGF’s positive spin, the raw numbers still reveal a glaring issue: Every year since 2006, more golf courses have closed in the U.S. than have opened. For example, last year saw 107 18-hole courses bite the dust, while only 46 were born. But does the recession deserve all the blame?

Remember the days (late 1990’s and early 2000’s) when new courses were sprouting up like daisies? And these weren’t shabby municipal tracks either – many were high-end daily fee courses that featured sharp grooming and sweet facilities. I remember one such place in my area – Pistol Creek Golf Club. It was a great course (see photo at top) with a good layout, awesome grooming and a dandy club house. It opened in 2001 and closed in 2005. Why?

If you’re observant, you’ll note that the year it closed (2005) is well before the current recession even started. Even 2006, which is when course closures began outpacing course openings in the U.S., was a full year before the effects of the subprime market started taking hold. So it’s obvious golf courses have been suffering for a while – certainly longer than the current recession.

The NGF gives a clue as to why in the headline of their press release: “NGF 2010 Openings/Closures Summary – Market Correction of Supply/Demand Imbalance Continue.” Simply put, they built too many damn courses for the number of golfers out there! So the next appropriate question would be; why?

I’m going to go out on a limb here and say it has something to do with Tiger Woods. Now I don’t have any data to back this up, but imagine it’s 1999 and you want to build a golf course. I’d give good odds that Tiger would be mentioned somewhere in your business plan or your pitch to the city council: “It’s this Tiger Woods, man! He’s changing the game!”

But did the golf industry over-estimate the impact of the Tiger phenomenon? Sure, he was good for the game, but perhaps his presence caused too many investors, architects and designers to jump on the bandwagon and simply overdo-it. Of course, this is all just speculation, but it seems entirely plausible.

So if the juggernaut that Tiger Woods once was compelled shiny new golf courses to be stacked upon the proverbial camel’s back, then the recession was only the proverbial straw. Golf, after all, is a luxury. And luxurious things are usually the first to go when money gets tight. Still, losing only 1.5 percent of courses over the past 5 years isn’t terrible. But it sends a clear message: “Market Correction of Supply/Demand Imbalance” is just a nice way of saying the golf industry is shrinking, not growing.

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